Exploration is poised to resume at the spectacular Little Spring Creek find in WA and gem production is on track for later this year at the Mothae project.
Long-time diamond buffs Miles Kennedy (chairman) and Stephen Wetherall (managing director) have positioned Lucapa Diamond Co (LOM) to become a rare thing before the year is out.
The rare thing status will arrive when Lucapa becomes a diamond producer from not one, but two diamond mines where the average value of the rough diamonds is more than $US1,000 a carat.
It is where a company needs to be in the at-times fickle diamond market because recent history has shown that the high-quality and large stone segment is seemingly immune from the ups and downs felt by the cheaper end of the market.
FinnCap’s mining research director Martin Potts summed it up in the following: “Over the past decade the price per carat for larger diamonds appears to have improved substantially, in line with the increase in the number of billionaires.”
Lucapa is an established alluvials diamond producer from its Lulo project in Angola where the tantalising search for the kimberlite source of the high-value stones continues. And in the second half of the year, Lucapa will establish its second production base at the redeveloped and expanded Mothae kimberlite mine in Lesotho, picked up last year.
Mothae stands as something of a game-changer for Lucapa as unlike alluvial operations which can be a bit hit and miss, it comes with a stock exchange-compliant diamond resource of more than 1 million carats (to a depth of 300m) at an average modelled value of $US1,063 a carat.
Kieron Hodgson, a rated analyst at London’s Panmure Gordon, came back from a visit to Mothae last month and penned a note which said the project was “being brought into full- scale production in a sensible and economically prudent manner, and given the propensity for large high-value diamonds, the current resource valuation offers scope for improvement.”
More to the point is that he placed a 46c price target on the stock. That compares with Thursday’s close of 23c, valuing Lucapa at $89m.
All that is very interesting and suggests a re-rating for the stock as Mothae kicks into gear in the second half and confirms volumes, grades and carat values.
Plus, Nagambie goes hunting for Fosterville-style bonanza gold. Read more +
